This follows a similar move by JP Morgan Chase: > Due to the economic uncertainty created by COVID-19, we’re temporarily not accepting applications for new hom

This follows a similar move by JP Morgan Chase: > Due to the economic uncertainty created by COVID-19, we’re temporarily not accepting applications for new home equity lines of credit (HELOC). This will protect both you and the bank. https://www.chase.com/content/chase-ux/en/personal/home-equity/update https://www.chase.com/content/chase-ux/en/personal/home-equi... From Wikipedia: > A HELOC differs from a conventional home equity loan in that the borrower is not advanced the entire sum up front, but uses a line of credit to borrow sums that total no more than the credit limit, similar to a credit card. HELOC funds can be borrowed during the "draw period" (typically 5 to 25 years). ... https://en.wikipedia.org/wiki/Home_equity_line_of_credit https://en.wikipedia.org/wiki/Home_equity_line_of_credit This has two main implications: 1. Two major banks are now worried about consumer solvency (and/or real estate prices) to the degree that they're forgoing HELOC origination profits across the board. An alternative response could have been to simply raise interest rates on these loans. The fact that the loans were suspended suggests a lot more afoot than meets the eye. Those suggesting to "cash-out refi instead" may be surprised to find in the coming weeks that these loans have also been terminated, or saddled with terms that make them unattractive. 2. Consumers who were planning to tap home equity to pay for monthly expenses will not be able to do so. This could spell a lot of trouble moving forward. US consumers view their homes as a kind of ATM, dispensing dollars on demand through HELOCs. That money can be used for literally anything. Without an easy source of credit to tap, where will the American consumer turn? In increasing order of existential risk: 1. Sale of big-ticket property (houses, boats, cars, cutting short college degrees). 2. Credit cards 3. Payday loans 4. Default on other loans 5. Bankruptcy protection These options magnify bad decisions made in the past. Selling big-ticket items drives down the market price of the underlying assets, which leads to more distress, and so on. Credit cards and payday loans charge indefensibly-high interest rates that can easily lead consumers further down the ladder of insolvency. Bankruptcy filings destroy money by wiping loans off the balance sheets of banks. Banks respond by tightening lending standards, which drives the cycle further down. How will employers likely respond? 1. Hiring freezes 2. Pay cuts (nominal or real, through increased employee contributions to health care plans) 3. Bankruptcy All of these things, from stress on consumers to pressure on businesses, are deflationary. Expect the value of cash to increase compared to the value of stuff. How to approach what lies ahead? If you're in debt, get out now. Then stay out. Deflation wipes out debtors as they're forced to pay back loans with ever-appreciating dollars.